August 20, 2022

The Ethereum Improvement Proposal 1559: Is the squeeze worth the juice?

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Ethereum Improvement Proposal 1559, set to be bundled together with the “London” upgrade in July, has caused as much excitement as fear and panic. On the surface, EIP-1559 is nothing more than a change in Ethereum’s gas fee structure. And to spice it up, it has also been labeled as Ethereum’s scarcity engine, or burn mechanism, as it will destroy Ether (ETH) used in transaction fees, making the cryptocurrency deflationary, and perhaps more valuable down the line. 

Related: Ethereum at a crossroads: Ether community turmoil over miner reward fees

Curbing Ether’s inflation will make the digital asset as deflationary as Bitcoin (BTC), meaning that its buying power will only increase over time. However, the relevance of the EIP-1559 proposal is based on fixing the runaway gas fees. The upgrade has been in the works for some time, but its timing couldn’t have come at a better time. Ethereum’s sky-high transaction fees are a result of the network being the most used blockchain in the world. This is partly due to its smart contract functionality, something that Bitcoin’s blockchain is limited in.

Ethereum’s functionality has seen it being used as the backbone of severalTitle: The Ethereum Improvement Proposal 1559: Is the squeeze worth the juice?
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Published Date: Wed, 31 Mar 2021 13:03:20 +0100